PROFESSIONALS COURSE BONDING CLAUSES
WHAT ARE THEY AND WHAT CAN YOU DO ABOUT IT?

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It is common for legal sector employers, particularly large firms, to agree to pay for their employees’ professionals course fees during an employee's first year of work.

 

However, some employers include a condition that requires employees to pay some or all of the amount of the course fees to the employer if they leave their workplace before a specified time (usually one to three years).


This approach can leave employees in a vulnerable position, as they are often on a low salary and become effectively “bonded” to the employer due to the risk of being required to pay a large sum should they want or need to end their employment.

Sound familiar? Read on to learn more about these clauses and what you can do about them.

Types of "bonding clauses"

The worst type of bonding clause does not allow for any reduction in the amount to be repaid.

Example:

The employer will pay the employee’s tuition fees for their legal professionals course. If the employee leaves the workplace within 24 months of their commencement date, the employee will be required to reimburse the full cost of their tuition fees.

In contrast,  a pro-rated bonding clause would mean that the employee still needs to pay a portion of the fees when they leave, but if, for example, they left after one year, they would only need to pay 12/24ths or half of the costs to the employer.

Example:

“The employer will pay the employee’s tuition fees for their legal professionals course. If the employee leaves the workplace within two years of their commencement date, the employee will be required to reimburse the cost of their tuition fees, less 1/24 of the cost for each month that the employee has worked at the workplace.”

Finally, a model example of this clause would not require any repayment of the fees. In ALWU’s view, this type of clause best accounts for:

  • the value that the employer gains from the employee from the first day they start work, as their time is billable from their commencement date;

  • the increased value that the employer gains from the employee undertaking the professionals course, as they can then bill the person out at a higher “solicitor” rate;

  • the financial and power imbalance between the employer and the employee. For example, the cost of a professionals course can be as high as 1/6th of a new grad’s net salary;

  • the fact that these high costs can force many employees to remain in difficult or unhealthy work situations during their bonding period.

Example:

“The employer will pay the employee’s tuition fees for their legal professionals course”.

What you can do

ALWU has had considerable success in challenging employers on the enforceability of bonding clauses that do not allow for reduction in fees.

ALWU’s preferred position is that the fee amount should not be repaid at all. For the reasons set out above, the employer’s investment in paying for professionals courses directly benefits the employer itself and should not be viewed as a benefit to the employee that requires repayment. ALWU can help you with talking to your employer about why you should not bear the cost of these fees. 

 

In the alternative, and at a minimum, ALWU can help you with talking to your employer about pro-rating the fees. if an employer does choose to insert a pro-rated bonding clause into the employment agreement, ALWU's view is that it is unreasonable for the bonding period to be any longer than one year. This reflects that after their first year, the employee will be admitted to the bar and being charged out at solicitor rates. 

 

By way of a hypothetical example only, you might want to leave your place of employment after 23 months but are bonded for 2 years. If your employment contract has a clause that does not permit pro-rating, you would need to repay the full amount of the cost of your professionals course to your employer (for example, the College of Law course currently costs $5,868). If that amount was pro-rated for a two-year term from your start date, you would only need to pay 1/24th of that amount ($244.50) as you have already worked for 23/24 months of the bonding period.

What's next?

If this issue is relevant to you or you have any concerns, get in touch at contact@alwu.org.nz. To access our free advocacy support services, you can sign up to be an ALWU member by clicking "join us" at the top of this page.

"It is vital that students and young professionals work in places that treat them with respect and support them in the early years of their career.  ALWU will ensure young lawyers' voices are heard."

Fletcher Boswell  New Zealand Law Students' Association, 2019